Ensuring You're Insured

By Chelle Cordero

August 11, 2017 5 min read

A common complaint is that the cost of insurance is high, but without insurance, if the unexpected were to happen, your losses could be even costlier. Knowing what your needs are might be the best way to protect yourself and not spend more than you have to.

For many people, their automobile is one of the more expensive investments they have made. You are not just protecting the machine when you pay for insurance coverage; you are also able to protect yourself and your occupants from the high costs of personal injury, and you are protecting yourself during any litigation that might come after an automobile mishap.

What insurance do you need, and how do you know what is prudent to spend?

*What Is Uninsured Auto Insurance?

Uninsured auto insurance protects you if you're hit by someone without car insurance. Of course, you expect other drivers to have their own insurance, so why should you pay for that type of insurance? Unfortunately, despite the fact that most states require drivers to have insurance, there are still drivers who do not carry any automobile insurance, and even if they do, it's sometimes inadequate. The Insurance Information Institute estimates that approximately 1 in 8 drivers are uninsured. There are also cases in which a minor mishap happens and the other driver doesn't stick around to clean up the damage. These are the cases in which uninsured auto insurance is useful. Nearly two dozen states require uninsured auto insurance.

Would you have the funds necessary to cover the cost of not only your car but also medical bills and other property damage? If the other driver has a liability cap of $25,000 and your medical bills cost $60,000, uninsured auto insurance can help cover the difference. Depending on where you live and the coverage you purchase, uninsured auto insurance can cost as little as $33 per year; states with fewer uninsured motorists typically charge less, whereas those with more uninsured motorists charge more.

*Do You Need Collision AND Comprehensive Coverage?

Collision will cover you if you get into an accident with another vehicle or run into a stationary object, such as a tree; comprehensive generally covers other events, such as natural disasters, fire, hitting a deer, falling objects, a broken windshield and acts of terrorism. Property damage liability will help to cover costs to repair property you damaged with your car, such as a fence. Having all three types of coverage can help prevent high out-of-pocket costs to repair your vehicle or other property damaged in an accident. If you are paying an auto loan or leasing a vehicle, all three coverages may be necessary.

Depending on the age and value of your car, you may want to explore the possibility of purchasing only comprehensive coverage, which averages about $200 yearly. If your car would cost less to replace than a few years' worth of collision premiums, then you may want to consider banking that money instead. However, if you carry comprehensive and your car is stolen or damaged in a fire or a flood, then the collision insurance could help pay you to replace the vehicle. The insurance company will always look at the cost of repair and the total value of the vehicle before deciding to pay for repairs or reimburse you for the loss.

*Can You Save Money by Bundling Insurance?

Insurance companies will often offer discounts on premiums when you have more than one policy with them, such as auto and home. Also, in many instances, if an event causes damage to more than one covered item, the insurance company will allow you to pay on only one deductible and will waive others. In addition to the convenience of having all of your policies organized as one, it is easy for your agent or broker to make sure you have no significant gaps in coverage.

Understand that an insurance agent works only for one company, whereas an insurance broker can represent multiple companies and is able to mix and match prices and deals. Learn what your local insurance laws are and what is required, and know the value of your car. Do comparison shopping to make sure you are getting the best value and best coverage possible.

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